Economics, as a branch of the more general theory of human action, deals with all human action, i.e., with mans purposive aiming at the attainment of ends chosen, whatever these ends may be.--Ludwig von Mises

Friday, October 21, 2011

From the General Motors bailout to subsidies for Solyndra, crony capitalism is as serious a threat to liberty, free markets and civil society as ever. Cato Institute Senior Fellow Tom G. Palmer recently discussed The Morality of Capitalism (free pdf), the financial crisis and cronyism at the John Locke Foundation.click for link to video of speech

To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.

The Federal Reserve has caused every single boom and bust that has occurred in this country since the bank's creation in 1913...

What the Austrian economists Ludwig von Mises and Friedrich von Hayek victoriously asserted in the socialist calculation debate of the 1920s and 1930s—the notion that the marketplace, where people freely decide what they need and want to pay for, is the only effective way to allocate resources—may be obvious to many ordinary Americans. But it has not influenced government leaders today, who do not seem to see the importance of prices to the functioning of a market economy...

What exactly the Fed will do is anyone's guess, and it is no surprise that markets continue to founder as anticipation mounts. If the Fed would stop intervening and distorting the market, and would allow the functioning of a truly free market that deals with profit and loss, our economy could recover. The continued existence of an organization that can create trillions of dollars out of thin air to purchase financial assets and prop up a fundamentally insolvent banking system is a black mark on an economy that professes to be free.

Tuesday, October 18, 2011

The Congressional Budget Office recently finished tallying the revenue and spending figures for fiscal 2011, which ended September 30, and no wonder no one in Washington is crowing. The political class might have its political pretense blown. This is said to be a new age of fiscal austerity, yet the government had its best year ever, spending a cool $3.6 trillion. That beat the $3.52 trillion posted in 2009, when the feds famously began their attempt to spend America back to prosperity.

What happened to all of those horrifying spending cuts? Good question. CBO says that overall outlays rose 4.2% from 2010 (1.8% adjusted for timing shifts), when spending fell slightly from 2009. Defense spending rose only 1.2% on a calendar-adjusted basis, and Medicaid only 0.9%, but Medicare spending rose 3.9% and interest payments by 16.7%.

Samsung’s move to have iPhone 4S sales banned in Australia and Japan is just the latest battle in the patent war between Apple and Samsung. It follows the EU's banning of the sale of Samsung’s Galaxy Tab (on hold for now). The war highlights the sorry state of the world’s patent laws...

The Apple/Samsung patent war is an example of patents at their worst. There’s a big deadweight loss associated with lawsuits and restrictions on commerce. And most of the challenges are completely spurious – should Apple really “own” the pattern of a four-column grid of apps on a tablet home screen, or the concept of a rectangular tablet computer? Apple and Samsung have created enormous value to a huge number of people, but in this case they're acting against consumer choice. Like blaming gravity for plane crashes or greed for financial crises, it's silly to blame the firms themselves. Fundamentally, it's the patent system that's at fault.

Politicians and pundits portray Herbert Hoover as a defender of laissez faire governance whose dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the stock market crash in 1929. In fact, Hoover had long been a critic of laissez faire. As president, he doubled federal spending in real terms in four years. He also used government to prop up wages, restricted immigration, signed the Smoot-Hawley tariff, raised taxes, and created the Reconstruction Finance Corporation—all interventionist measures and not laissez faire. Unlike many Democrats today, President Franklin D. Roosevelt's advisers knew that Hoover had started the New Deal. One of them wrote, "When we all burst into Washington ... we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself."

Hoover's big-spending, interventionist policies prolonged the Great Depression, and similar policies today could do similar damage. Dismantling the mythical presentation of Hoover as a "do-nothing" president is crucial if we wish to have a proper understanding of what did and did not work in the Great Depression so that we do not repeat Hoover's mistakes today.

Saturday, October 8, 2011

This world is governed by ethical cause and effect. When people vote for a living, they create an economy that is dependent on more theft. Theft-based economies are Ponzi schemes. It's not just Social Security that is a Ponzi scheme. So is Medicare. So is the FDIC. All governments over-promise. They ask us to become dependent on government promises. The governments issue more promises than taxes and borrowing can fund. Then they inflate.

Government will prove to be the god that fails. That will be a good lesson in theology for hundreds of millions of voters. "Thou shalt not steal, except by majority vote" will prove to have been a destructive principle, although widely believed.

Friday, October 7, 2011

Everyone knows that the term fascist is a pejorative, often used to describe any political position a speaker doesn’t like. There isn’t anyone around who is willing to stand up and say: "I’m a fascist; I think fascism is a great social and economic system."

But I submit that if they were honest, the vast majority of politicians, intellectuals, and political activists would have to say just that.

Fascism is the system of government that cartelizes the private sector, centrally plans the economy to subsidize producers, exalts the police State as the source of order, denies fundamental rights and liberties to individuals, and makes the executive State the unlimited master of society.

This describes mainstream politics in America today. And not just in America. It’s true in Europe, too. It is so much part of the mainstream that it is hardly noticed any more.

It is true that fascism has no overarching theoretical apparatus. There is no grand theorist like Marx. That makes it no less real and distinct as a social, economic, and political system. Fascism also thrives as a distinct style of social and economic management. And it is as much or more of a threat to civilization than full-blown socialism.

This is because its traits are so much a part of life – and have been for so long – that they are nearly invisible to us.

If fascism is invisible to us, it is truly the silent killer. It fastens a huge, violent, lumbering State on the free market that drains its capital and productivity like a deadly parasite on a host. This is why the fascist State has been called The Vampire Economy. It sucks the economic life out of a nation and brings about a slow death of a once thriving economy.

“No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

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The Philosophy of Liberty

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The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.

Ludwig von Mises

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings. To stress this point is the task of economics.

Ludwig von Mises

Quotes

Underlying most arguments against the free market is a lack of belief in freedom itself.

Milton Friedman

Economic history is a long record of government policies that failed because they were designed with a bold disregard for the laws of economics.

Ludwig von Mises

The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.

Frederic Bastiat

Modern civilization is a product of the philosophy of laissez faire. It cannot be preserved under the ideology of government omnipotence.

Ludwig von Mises

No one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result.

Ludwig von Mises

Freeing the economy is the only path to sustainable prosperity.

Sheldon Richman

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

FA Hayek

Tyranny is the political corollary of socialism, as representative government is the political corollary of the market economy.

If we can’t trust people with freedom, how can we trust them with power?

Sheldon Richman

As soon as we surrender the principle that the state should not interfere in any questions touching on the individuals mode of life, we end by regulating and restricting the latter down to the smallest details.

Ludwig von Mises

A claim for equality of material position can be met only by a government with totalitarian powers.

F. A. Hayek

We must fight all that we dislike in public life. We must substitute better ideas for wrong ideas.

Ludwig von Mises

If you think we are free today, you know nothing about tyranny and even less about freedom.

Tom Braun

The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybody's actions aim at the satisfaction of other peoples needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens.

Ludwig von Mises

Anyone who wants to vote probably shouldn’t be allowed to vote. Voting is the first step towards zombification – trying to get something without actually working for it.

Bill Bonner

A market-based economy is extraordinarily resilient, but cannot forever bear anti-business rhetoric and overweening governmental intrusion into affairs best left to the private sector.

William Shughart

Government is not created to produce public goods, to control externalities, or to enforce social cooperation for the good of all. It is created by force for the benefit of its creators.

Randall Holcombe

Economics is not about goods and services; it is about human choice and action.

Ludwig von Mises

...neither do I subscribe to the idiotic neo-Keynesian econometric crapola that fascinates the Federal Reserve and mainstream academia, a theoretical monstrosity which has resulted in the horrific economic mess we are in, and from which there is, alas, no escape.

Richard Daughty

Economics deals with society's fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.

Ludwig von Mises

Keynesianism is not a theory of economics. It is a confidence game, and the question is not whether they can correctly predict the future. The question is, can they gain your confidence and get you to act in such a manner that they can steal your wealth?

Howard S. Katz

Government means always coercion and compulsion and is by necessity the opposite of liberty.

Ludwig von Mises

True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.

Ludwig von Mises

Mr. Benanke has never been right about anything.

Jim Rogers

The essence of Keynesianism is its complete failure to conceive the role that saving and capital accumulation play in the improvement of economic conditions.

Ludwig von Mises

A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.

Ludwig von Mises

Economists are often asked to predict what the economy is going to do. But economic predictions require predicting what politicians are going to do-- and nothing is more unpredictable.
Thomas Sowell

The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.

Thomas Sowell

Quotes Two

But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.

Howard Buffett

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.

Friedrich A. Hayek

Bernanke is a complete fool, trapped in academic wonderland, completely oblivious as to how the real world works. To top it off, Bernanke has the gall to knowingly lie about the real world effects of his blatant stupidity.

Mish Shedlock

Gold as money prevents inflationary policies and corruption. Gold is a precondition for a free society. It is the most liquid product, the best store of value, the best insurance and nobody else's liability.

Ferdinand Lips

In economic terms, a zombie is a parasite. He contributes less to the economy than he takes from it. He lives at the expense of others.

Bill Bonner

As soon as the economic freedom which the market economy grants to its members is removed, all political liberties and bills of rights become humbug.